Input tax credit in respect of tax-free goods which became taxable with effect from 17 July 2022

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This discussion addresses the eligibility for Input Tax Credit (ITC) on goods that transitioned from tax-exempt to taxable status on 17 July 2022. Specifically, it seeks guidance on claiming ITC for unsold finished goods and unused input materials that were previously exempt. The core question revolves around how to calculate and claim ITC for these items, particularly for the finished goods, given they are now subject to GST.

Manoj Chauhan

Manoj Chauhan (Querist)
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30 July 2022 Dear Sir,

Some of the items/goods which were earlier exempt from GST became taxable starting 17 July 2022.

In this connection, please guide regarding following:
(1) We have unsold stock of FG (Finished Goods) which became taxable from 17 July 2022.

(2) We have also unused/un-consumed stock of "Inputs" which goes into making the FG mentioned in Point No. 1 above.

(3) Which input tax credit we can now avail in respect of the above 2 items (FG and Inputs)

(4) We are sure we can take input tax credit in respect of the unused input items (as they will be now used in making taxable products)

(5) We are not sure about the input tax credit for FG.

Thanks.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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31 July 2022 You are going to pay GST on FG hence take ITC on it.

Manoj Chauhan

Manoj Chauhan (Querist)
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02 August 2022 Thanks for the reply. Could you please elaborate on this? Because how we can find the GST amount (for Input Tax Credit purpose) on FG. In this particular case, is ITC equal to GST payable on FG?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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03 August 2022 I can't understand your query.
Your out put of FG is taxable calculate concerned input and claim it.

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